GBP/USD consolidates losses below 1.33, remains near 3-week lows

The GBP/USD pair plummeted to its lowest level since September 14 at 1.3256 in the early NA session and started to consolidate its losses. As of writing, the pair was trading at 1.3277, losing 0.9%, or 120 pips, on the day.

Earlier in the day, the GBP came under a broad-based selling pressure after the manufacturing PMI data from the UK eased to 55.9 from 56.9 in September, missing the market estimate of 56.4 and hurting the expectations of a BoE rate hike in 2017. 

In addition to the GBP weakness, the greenback is showing a solid performance on Monday with the US Dollar Index touching its fresh 6-week highs at 93.51 and further weighing on the pair. Today's data from the U.S. showed that the business activity in the manufacturing sector in the U.S. accelerated at a faster pace than experts anticipated. More importantly, further details of the ISM and Markit reports both showed that the input prices rose sharply, suggesting a potential increase in the PPI in the short-term.

However, Minneapolis Fed President Neel Kashkari's comments in the NA session limited the DXY's upside, not allowing the GBP/USD pair to push lower.

• Fed's Kashkari: Fed's policy tightening has led to low inflation

Tomorrow's economic calendar will feature the PMI data for the construction sector in the UK, and another disappointing reading could continue to hurt the demand for the GBP.

Technical outlook

The pair could encounter the first technical support at 1.3200 (psychological level) ahead of 1.3235 (50-DMA) and 1.3030 (100-DMA). On the upside, resistances align at 1.3415 (20-DMA), 1.3500 (psychological level) and 1.3585 (Sep. 21 high). With today's sharp fall, the RSI indicator on the daily graph turned south below the 50 handle, suggesting that the bearish momentum is building up.

• GBP/USD remains bearish near term – Scotiabank
• GBP/USD: Rebounds appear corrective as a broad consolidation pattern develops – Westpac

Today's data from the U.S.

• US: Economic activity in the manufacturing sector expanded in September - ISM
• US: September PMI signals further improvement in manufacturing conditions - Markit
• US: Construction spending during Aug 2017 was estimated at an annual rate of $1,218.3 bln